Attainment of rational expectations equilibria in asset markets calls for the price system to disseminate traders' private information to others. It is known that markets populated by asymmetrically-informed profit-motivated human traders can converge to rational expectations equilibria. This...

Information aggregation is a key economic function of markets. Evidence on limitations of human cognitive abilities have led some to doubt the usefulness and relevance of rational expectations equilibria in modeling information aggregation. We report results of a computational experiment with...

Independence (in fact as well as in appearance) is widely thought to be necessary for the quality of audits, and audit quality is often equated with independence. Private incentives to demand (and supply) independent certification of financial statements are thought to be insufficient, thus the...

Financial accounting standards in the U.S. are developed by private standard setting organizations (SSOs) that operate under the oversight of a government agency. The primary accounting SSO (FASB) has been criticized for writing too many standards (standards overload), the complexity of its...

Two key assumptions underlying the regulation of U.S. financial reporting are the need to mandate the certification of financial statements, and to require that this certification be performed by independent auditors. Private incentives to demand (and supply) certification are thought to be...

We investigated the benefits (more accurate valuations) obtained from the use of more specific measures, such as the use of specific price indexes, rather than a general price index, to approximate the current value of historical cost accounting numbers. We found the valuation accuracy function...